I am hoping someone can help me out that has gone through this. I am about to enter into contract on a 4 Plex in Oakland, CA. I am going the FHA route and will have to occupy (owner occupied) the property within 60 days. The catch is that all 4 units are occupied and I am going to have to evict one of them which will most likely take longer than 60 days. Does anyone have a similar experience with FHA loans. Is this a show stopper? What will I need to provide the loan officer to prove my intent is to live in the property but might take longer than 60 days? Any information/help is greatly appreciated. This is my first investment property.
I have no idea about your question but I am curious in what area is the 4 plex? I lived in and around Oakland for 35 years (Oakland, Berkeley, Orinda) My son is still there.
I bought my first fourplex in San Jose using FHA a couple years ago. Same story -- I had to evict the tenant so I could owner occupy. It took me about 3 months before I finally moved in. It's a good question for your lender, but it wasn't an issue with mine. As long as you have the intent to move in right away, that might be good enough. Of course there may be unforeseen circumstances beyond your control that may prevent you from moving in as soon as you like (ie, if the tenant fights the eviction), but in my case the lender didn't take issue with it. The only thing to keep in mind is that you may start receiving mail at your new address while the tenant being evicted is still living there. That's probably a small issue unless your tenant is malicious.
Have you considered using a conventional owner-occupied loan instead of FHA? FHA now has permanent mortgage insurance, which makes it quite expensive in a lot of scenarios. If you have 20% down (or can get it from gift funds, parents, etc.), then I would seriously consider using a conventional loan. These are all good things to review with your lender. If you don't have one, PM me and I'll connect you with mine.
Thanks Chris. That is helpful. I am going the FHA route so I don't have to tie up so much money right away and can spend some on upgrading the building. I am also considering doing cash for keys. I believe, if I evict the tenant, I would have to live in the property for 3 years. Below website gives some info around evictions.
James, property is in North Oakland.
Thanks for the link; that's very helpful. I'm also working on a deal in Oakland, and may owner occupy, so I'm going to need a good attorney. I'll have to check out Fried & Williams.
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